The BSE Sensex settled at 35,742, down 690 points or 1.89 per cent lower while Nifty50 shit shop at 10,754, down 198 points or 1.81 per cent.

All the sectoral indices on BSE ended in the red, with IT falling the most by 2.62 per cent, followed by Teck (down 2.60 per cent), Auto (down 2.12 per cent), Telecom (down 2.05 per cent) and Consumer Durables (down 2.04 per cent).

Viral Berawala, CIO, Essel Mutual Fund said, "After showing strength in the past few days despite weak global cues, Indian markets finally succumbed to negative cues of global slowdown, increased US borrowing costs and US-China trade wars. Though India macro continues to turn for the good with lower crude, FII selling continued to be a major overhang on the market. Market ignored positive news of PSU bank recapitalisation and selling was seen across sectors.”

Analysts called it mean reversion for the market, which had outperformed its global peers for the past one month. Indian equity indices, which usually enjoy a positive correlation with Dow Jones, have been moving in contrasting direction since November 12.

Growing concern over economic slowdown has sparked the major selloff on Wall Street over the past two months, that has left the Nasdaq on the verge of slipping into the bear territory.

On Dalal Street, as many as 27 components in the 30-share Sensex traded in the red on Friday, with Maruti Suzuki falling 3 per cent, followed by Asian Paints (down 2.62 per cent), Infosys (down 2.55 per cent), YES Bank (down 2.38 per cent) and ICICI Bank (down 2.32 per cent).

Going by the buzz on Dalal Street, here are five top reasons that dragged the market:

Profit-bookingSmart money has started booking profits, taking money home. Amid the global uncertainty, foreign institutional investors are not taking any risk going into a long holiday.

Market is reverting to mean after outperforming for several days. Stocks that logged significant gains over the past few days have seen major corrections, signalling profit booking.

Global cuesGlobal equity markets continued to remain under pressure after the US Federal Reserve indicated that it was set on its path to hike interest rates next year despite signs that global economic growth is stuttering. The threat of a US government shutdown further inflamed investor unease over the economic outlook. On Wall Street, the Dow declined 464 points, or 1.99 per cent, to 22,859 on Thursday, while the S&P500 plummeted 40 points, or 1.60 per cent, and the Nasdaq 108 points, or 1.63 per cent, to 6,528.

RupeeThe rupee came under fresh pressure on Friday and slipped 56 paise to quote at 70.26 against the US dollar in afternoon trade.

Energy stocksEnergy stocks are under pressure as crude oil prices have tanked sharply in global markets over the past few days. While crude prices did look up on Friday on Opec signal for higher cuts, the outlook remains grim. Crude prices fell some 5% on Thursday.

Farm loan waiverSome analysts say market is jittery about the possible implications that a spate of farm loan waivers is going to have on the credit market and health of public sector banks. Also, some analysts say a surge in liquidity in the market may create fresh inflationary pressure in the economy.

Expert Take:Market analyst
Ajay Bagga said he is clueless what went wrong. “I do not know right now what led to this kind of basket selling. Maybe, it is because of the holiday-shortened week ahead, the coming year end, probably smart money is booking some profits. Otherwise, there are not enough fires to cause such sharp movement. If this had to happen, this should have actually happened on December 11, 12, not now. It is a like delayed action. None of us can figure out why that is happening today, and not a week earlier,” he said.

However,
Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, IIFL Securities, said the correction is a great buying opportunity for investors.

“It is a perfect buying opportunity. We think there was this feeling of why India is outperforming and certain people may have come and booked profits, but we think this is routine. India is going to be an outperformer and we think next week, globally market should recover. So we are looking forward to a very bright Christmas and very happy new year and we think 11,000 is going to be retested by the d of December,” he said.

Joseph Thomas, Head of Research at Emkay Wealth Management, said the market witnessed selling pressure, mainly due to fears of lower global economic growth in the coming year.

“OECD forecasts pegged the growth rate lower at 3.70 per cent against 3.90 per cent projected earlier. Growth estimates for China have been downgraded by international agencies from 6.60 per cent to 6.30 per cent - lowest ever growth in a decade, both of which point towards a slowdown with far reaching implications for financial markets. The markets came down by almost 1.83 per cent (Nifty) and 1.86 per cent (Sensex), and the broader market also came down, giving up quite a major chunk of the gains made in the last one week. IT and auto stocks suffered over 2 per cent loss as concerns over a stronger rupee hurt IT stocks,” he said.